The Hindu Business Line : 3G, wireless broadband auction to fetch Rs 9,500 cr

Expanding services
To constitute frequency management board for planning spectrum usage
3G spectrum in 2.1 Ghz to be made available in 6-9 months
Operators who do not win bid to be given spectrum when available

New Delhi , Sept. 27

The Government will rake in at least Rs 9,500 crore from auctioning spectrum for wireless broadband and third generation (3G) cellular services as per the recommendations of the Telecom Regulatory Authority of India (TRAI).

This is much higher than what the Government received during the fourth cellular bidding process (Rs 1,600 crore) and when WLL limited mobility operators converted their licences to full-fledged mobile services (Rs 3,000 crore).

In its recommendations released today, the TRAI has set a base price ranging between Rs 15 crore and Rs 80 crore per circle (depending on commercial importance) for operators seeking to bid for 3G spectrum.

Similarly, a base price between Rs 2 crore and Rs 10 crore has been set for wireless broadband spectrum (Wi-max, Wi-fi, etc).

As per the TRAI's estimates, an operator seeking spectrum for 3G and broadband services may have to commit a minimum one-time entry fee of Rs 1,500 crore for a pan-India licence.

There are 23 circles in the country and the auction process recommended by the telecom regulator makes way for at least six operators in each of these circles. Over and above this, operators will have to pay the amount they quote during the auction plus the spectrum charges amounting to one per cent of their annual revenues from the second year of operations.

The TRAI has also set strict rollout obligations for the operators and failure to fulfill them will attract a penalty equivalent to 2.5 per cent of the amount the operator bid for to acquire the spectrum, for every three months of delay.

While the TRAI has said that the money collected will be partly utilised for compensating the Defence forces for vacating spectrum, for telecom consumers this means that 3G services may not come cheap as the operators may pass on the cost of acquiring the licence in the form of higher tariffs.

However, EVDO-based (evolution data optimised) 3G services offered by CDMA operators such as Tata Teleservices could be cheaper since the TRAI has fixed a base price that is half of what operators will pay for offering services using the Wideband CDMA (WCDMA) technology offered by GSM operators. For instance, while the base price for Delhi circle is Rs 80 crore for WCDMA spectrum in 2.1 Ghz, the base price for a CDMA operator opting for 450 Mhz, for EVDO services, will be Rs 40 crore.

As per the TRAI's proposal, five operators will be accommodated in the 2.1 Ghz band, one in 450 Mhz and two in 800 Mhz.

The latter two frequency bands have been reserved for CDMA-based EVDO operators to compensate them for not giving bandwidth in the 1900 Mhz band.